Flying through Farnborough I was warned that according to my Transponder/Encoder I was 200ft above my declared altitude (altimeter). So from a legal point of view which should I use and could I argue that my altimeter was reading 2400ft and that my encoder was giving wrong information. Bear in mind that the aircraft has an annual radio check, every 3 years the transponder AD is done and that both use the same static source. Some altimeters had the encoder built in (set of revolving discs) which were probably/possibly synchronised. It seems to me that that until we all have transponders displaying altitude we will never know if there is problem between the two. I have my encoder connected to the GPS which I believe reduces the satellite search time; it would nice to see the differences (GPS v Encoder) but I believe there is no way that a GPS could give you accurate height information based on a time algorithm.